As a taxpayer, it is important to make investment before March 31 to be able to claim tax exemption.
Although taxpayers will be unable to claim tax benefits for their investments if they opted for the new tax regime. However, in the old tax regime, taxpayers can still claim tax exemption so long as investment is done on or before March 31.
These are some of the investments one can make under the old tax regime to be able to claim following tax benefits:
HRA exemption: Under the old tax regime, House Rent Allowance (HRA) is exempted under section 10(13A) for salaried individuals. It is not allowed in the new tax regime.
Section 80C: These are some of the tax-saving instruments in which taxpayers can invest upto ₹1.5 lakh to be able to claim tax deduction.
These include ELSS (equity linked savings scheme), Sukanya Samriddhi Yojana (SSY), Public Provident Fund (PPF), National Savings Certificate (NSC), Senior Citizen Savings Scheme (SCSS), Life insurance, Kisan Vikas Patra (KVP) and Post office term deposit.
Section 80D: This is tax deduction for health insurance premium upto ₹25,000 and ₹50,000 for senior citizens.
Section 80DD: This is income tax deduction for spending on a disabled dependent.
Section 80G: This allows a tax deduction for contributions to certain relief funds and charitable institutions.
These are some of the key points to remember:
1. These income tax deductions are available only for those taxpayers who have opted for the old tax regime.
2. The new tax regime – which is the default regime now – does not allow the taxpayers to claim these deductions and exemptions.
3. There are certain thresholds below which taxpayers can claim these deductions. For instance, taxpayers can claim deduction only upto ₹1.5 lakh under section 80C of Income Tax (I-T) Act. Any investment above this will not amount to tax saving.
4. If you are unsure whether your tax deduction (under old tax regime) will lead to a lower tax outgo or not, then you can use the income tax calculator where you can compare the tax computed under both the regimes to be able to take a calculated decision.
The tax department has shared the tax calculator on its website. Here, you can acces the tax calculator.
